Amazon Facing Fresh UK Tax Avoidance Row

By Staff Reporter

May 25, 2014 16:34 BST

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The internet retail giant Amazon is facing fresh claims of tax avoidance after its latest accounts showed it routed more than £11 billion through its Luxembourg-based subsidiary in 2013 – yet paid only £4 million in UK corporation tax last year.

Amazon trades through the Luxembourg subsidiary, Amazon EU SARL, in order to reduce its UK tax bill. When customer order goods from Amazon.co.uk the payment is channelled through the Luxembourg arm of the company, which then pays the UK branch a fee to deliver the item.

In the UK, Amazon has more than 5,000 employees, yet benefits from Luxembourg's extremely low corporate tax rates. The strategy is legal but Amazon has faced fierce criticism from rival retailers, politicians and consumers over the amount it pays to HM Revenue & Customs in the UK.

The £4m Amazon paid in UK corporation tax is only 0.1% of the £4.3bn in sales that the company generated in the UK last year. But the internet giant also claimed a £4m tax rebate from the Luxembourg Government, where its European operation is based.

The company's 2012 public accounts show it routed €11.6bn (£11bn) through Amazon EU SARL in Luxembourg last year and turnover rose by 14% last year – before the tax claw-back from the Luxembourg authorities.

John Lewis and other high street stores have attacked Amazon's accounting tactics, which they say give Amazon an unfair advantage by using the Luxembourg loophole to shield its profits from the UK taxman.

Amazon, Google, Starbucks and other multinational companies have faced a backlash from European politicians and customers over their complex tax arrangements.

In a statement to The Sunday Times, Amazon said: "[We pay] all applicable taxed in every jurisdiction [where we operate]. We have a single European headquarters in Luxembourg with hundreds of employees to manage this complex operation."